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TPP dead: What it really means for Malaysia

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Photo edit from Bloomberg

AFTER the shock waves and the knee-jerk reactions his election as the latest US president, we should expect Donald Trump’s to do list to include the revision of the Trans-Pacific Partnership (TPP) — a trade and investment deal that is dear to many countries, including Malaysia, Vietnam and Singapore.

Analysts are saying that Donald Trump’s presidency will most likely to lead to the US pressing for the revision, or even for a far simpler pullout, from the much-criticised and much-hated deal which was signed in February this year in Auckland, New Zealand by Malaysia and 11 other member countries.

The 11 other signatories were New Zealand, Australia, Chile, Mexico, Japan, Peru, Canada, Vietnam, United States, Singapore, Brunei. Vietnam, Malaysia and Singapore were the three Asean states in the frontline of the TPP’s painful birth. Their deal makers were pushed to the limit of exasperation and anger by vociferous anti-TPP campaigners and activists who were demanding transparency, clarity and an open discussion on the deal.

When International Trade and Industry Minister Datuk Seri Mustapa Mohamed signed the comprehensive pact for Malaysia, it was with a sigh of relief.

Hopes were high, with think tanks, along with agencies such as Pricewaterhouse Coopers (PwC) and others were full of praise of the potential that it represents.

That is the gigantic US$30 trillion (RM128 trillion) that it represented or 40% of the global gross domestic product (GDP).

We were told Malaysia’s GDP will be boosted by the implementation of the TPP.

We were told, after accepting the fact the TPP was becoming a reality — despite the years of gruelling questions thrown at Malaysian negotiators — the country stood to reap up to US$200 billion in economic gains over nine years, aided by faster investment growth and greater market access.

A PwC study revealed that export-oriented industries, such as electrical and electronics (E&E), textiles and automotive manufacturers, would gain the most.

While it said the deal presents “net economic benefits to Malaysia,” PwC also warned that there would be adjustment costs to firms due to increased competition and cross-sectoral TPP obligations.

Yet, if you ask me, these reports and analysts did not look into the wider impacts that this trade pack would have on Malaysia or even Vietnam — where the adjustments would not be structural in nature alone.

There will be fundamental adjustments that needs to be made in many sectors. TPP will also embrace many aspects of US labour laws, to start with, that currently does not exist in Malaysia, Singapore, Vietnam and Brunei.

With the Trump presidency, we should take seriously his strong opposition to the trade-investment pact once the he sits in the White House.

Observers are saying the Vietnamese economy will be impacted to some extent because TPP would have allowed the country to access markets where Hanoi does not trade agreements.

Others are saying without the participation of the US, the TPP will dissolve automatically.

In 2015, Fitch Ratings said that the TPP will be a significant contributor to long-term economic integration for member states and although the pact is unlikely to be a game- changer for members’ economic prospects in the short term, it may have more significant long-term implications for some countries than others.

With the massive opposition against the TPP still brewing in the shadows — it did not die out completely in some countries — Trump’s move to pull the US out of it or his attempts to rewrite the deal could mean a lot to certain TPP signatories, especially Malaysia and Vietnam.

A seminar on the TPP, touching mostly on labour laws, became an academic discourse in Kuala Lumpur on Wednesday.

The participants were soon distracted by the sudden surge of Trump votes in the US elections, and their interest in the TPP soon dissipated when it was apparent he will defeat Hilary Clinton.

A press conference, in which the ambassadors of four TPP nations — Australia, Japan, New Zealand and Singapore — were to participate in the US was canceled. They had planned a Thursday briefing on the importance of the deal.

Trump’s victory, combined with the Republican party staying power in both the US Congress and Senate, has theoretically killed the TPP.

If Trump pushes for a US pullout, it will only confirm the pact’s formal demise.

Unless the original founders of the idea that grew into the TPP decide — with new partners including Malaysia, Vietnam and Japan — to maintain the status-quo and move on with the deal without the US.